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Central bank gold buying remains firm

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(Kitco News) - Central banks added a net 59t to global gold reserves during the month (June). It was not the first month this year to see no reported sales, based on currently available IMF data. In all, central bank net purchases for Q2 stand at 180t, pushing the H1 total to 270t as reported according to data from the World Gold Council (WGC).

In terms of numbers, Iraq was the largest purchaser in June, adding 34t to its gold reserves. This is Iraq’s first addition since September 2018 (7t) and lifts total gold reserves to 130t, 11% of total reserves. In terms of the rest Uzbekistan (9t), Turkey (8t), Kazakhstan (4t), and India (4t), all regular buyers, were the other significant purchases during the month.

This is a continuation of the strong buying that we saw last year and we now expect full-year central bank demand for 2022 to be on a par with 2021 levels. A very good sign for the yellow metal. It will be interesting to see what happens if the USD pulls back slightly too as many central banks have been holding USD reserves. 

Gold is currently trading at $1765/oz. There was a brief move higher on Tuesday as China threatened Taiwan due to the Nancy Pelosi visit. The high from Tuesday was at $1788.03/oz. Tensions between the U.S. and China are still higher so this theme is still dominating markets today. There are also the services PMI data to come from Europe and the U.S. so that could inspire some volatility. 


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